Chapter 16 - Market Analysis Flashcards
“The study of the supply and demand in a specific area for a specific type of property.”
is definition of _________
Market analysis
Market analysis is defined as:
“The study of the supply and demand in a specific area for a specific type of property.”
“Buyers and sellers of particular real estate and the transactions that occur among them.”
is definition of __________
Real property market
Real property market is defined as:
“Buyers and sellers of particular real estate and the transactions that occur among them.”
A property’s _______ is the area from which its demand is found and that contains its direct competition.
market area
The objective analysis of observable and/or quantifiable data indicating discernible patterns of urban growth, structure, and change that may detract from or enhance property values; focuses on four sets of considerations that influence value: social, economic, governmental, and environmental factors.”
is definition of _______
Market area analysis
(also referred to as neighborhood analysis)
Market area analysis is defined as:
“The objective analysis of observable and/or quantifiable data indicating discernible patterns of urban growth, structure, and change that may detract from or enhance property values; focuses on four sets of considerations that influence value: social, economic, governmental, and environmental factors.”
Earlier in the course, we studied the four major influences on value: governmental, economic, social, and environmental. All these forces occur at various levels: (4) __________
national, state, regional, and local
“A division of a total market that reflects the preferences of a particular set of buyers and sellers, e.g., fast food restaurants as a submarket of the overall restaurant market.”
is definition of ____________
submarket
A submarket is defined as:
“A division of a total market that reflects the preferences of a particular set of buyers and sellers, e.g., fast food restaurants as a submarket of the overall restaurant market.”
Examples of submarkets within total residential market:
- Single-unit
- Two- to four-unit
- Multi-unit
- Old houses
- New houses
- Starter homes under $100,000
- Mid-range homes between $100,000 and $300,000
- Luxury homes in excess of $300,000
- Condominiums
- Apartments
- Townhouses
- Suburban houses
- Rural houses
“The process by which submarkets within a larger market are identified and analyzed.”
is definition of _________
Market segmentation
Market segmentation is defined as:
“The process by which submarkets within a larger market are identified and analyzed.”
Disaggregation is defined as:
“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics.”
“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics.”
is definition of _____________
Disaggregation
“Buyers and sellers of particular real estate and the transactions that occur among them” is the definition of a(n)
- market value
- real estate market
- feasibility analysis
- microeconomics
real estate market
A subject property’s market area would be defined as
- its neighborhood
- within 1 mile of the subject in an urban area, and within 10 miles in a rural area
- the area from where demand comes and that contains its competition
- the geographic area within five miles of the property
the area from where demand comes and that contains its competition
“A process for examining the demand and supply of a property type and the geographic market area for that property type” is the definition of ____________ analysis.
- highest and best use
- microeconomic
- feasibility
- market
market
What process would an appraiser use to identify submarkets within a larger market?
market segmentation
Which field of study focuses on the economics of individual firms, industries, or consumer segments?
- highest and best use
- microeconomics
- macroeconomics
- feasibility analysis
microeconomics
Which field of study focuses on the economy as an aggregate system, considering national/domestic income, the supply of money, the rate of inflation, and the national budget?
- demographics
- microeconomics
- macroeconomics
- absorption
macroeconomics
Demand Analysis
In applying the appraisal process to residential properties we may research and analyze factors such as:
- Population trends
- Income and wage levels
- Employment types and patterns
- Unemployment rates
- Mortgage information
- Land use patterns
- Physical factors
- Local government
Supply Analysis
In supply analysis we may research and investigate:
- Existing stock
- Volume of new construction
- Planned construction - new building permits
- Availability and price of vacant land
- Costs of construction
- Properties offered for sale
- Conversions in progress
- Availability of financing
An absorption rate is defined as:
“Broadly, the rate at which vacant space in a property or group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time.”
A residential absorption rate may predict that there is a sustainable need for an additional 500 units per year
“Broadly, the rate at which vacant space in a property or group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time.”
is definition of:
absorption rate
An absorption period is defined as
“The actual or expected period required from the time a property, group of properties, or commodity is initially offered for lease, purchase, or use by its eventual users until all portions have been sold or stabilized occupancy has been achieved.”
“The actual or expected period required from the time a property, group of properties, or commodity is initially offered for lease, purchase, or use by its eventual users until all portions have been sold or stabilized occupancy has been achieved.”
is definition of:
absorption period
This is a crucial time frame for developers. If I build 30 new houses, how long will it take until they are all sold? Developers or entrepreneurs have to lay out many expenses up front for the initial site development and construction. They have to build the buildings, access roads, incur site development costs, and then carry the property including taxes and insurance costs before the first dollar of return comes back from property sales. It makes a big difference to the developer’s bottom line if the units will be sold out in two months or two years.
A marketability analysis is defined as:
“A study of how a specific property is expected to perform in a specific market. A marketability analysis expands on a market analysis by addressing a specific property.”
“A study of how a specific property is expected to perform in a specific market. A marketability analysis expands on a market analysis by addressing a specific property.”
is definition of: ________
marketability analysis
A feasibility analysis is defined as:
“The study of a cost-benefit relationship of an economic endeavor.”
“The study of a cost-benefit relationship of an economic endeavor.”
is definition of ___________
feasibility analysis
A large local employer announces plans for immediate expansion, which will add 400 new jobs. There are only 180 houses available for sale in the market at this time. What is MOST likely to happen in the near future?
- the number of building permits issued will increase
- a “buyer’s market”
- the new jobs will displace old service industry jobs, so there will be no net gain
- property values will decline gradually
the number of building permits issued will increase
In an urban market, an appraiser may note a trend of converting
- apartments to condominiums
- large single-unit homes to multi-unit apartments
- apartments to co-ops
- all of these
all of these
If you are trying to determine the number of existing single-family residences in a local municipality, your best source of this information would be
- Yellow Pages
- assessor’s office
- local MLS
- large local employers
assessor’s office
Researching and analyzing the number of new building permits issued is primarily an element of __________ analysis.
- supply
- demand
- feasibility
- macroeconomic
supply
True or False? Availability of financing is part of supply analysis because builders and developers need to be able to obtain financing in order to build homes or buildings.
True
True or False? While material costs vary greatly throughout the United States, labor costs do not vary with location.
False
“The rate at which vacant space in a property or group of properties has been or is expected to be successfully sold or leased over a specified period of time” is the definition of a(n) __________ rate.
- feasibility
- absorption
- prime
- saturation
absorption
“An analysis of the market conditions of supply, demand, and pricing or the demographics of demand for a specific property type in a specific area” is the definition of
- market study
- comparative market analysis
- appraisal
- demographic study
market study
Identifying the most probable user for a particular type of property is a component of ___________ analysis.
- economic base
- macroeconomic
- supply
- demand
demand
In residential properties, which would NOT be a factor in demand analysis?
- income and wage levels
- mortgage information
- building permits issued
- land use patterns
building permits issued
Market areas are defined in terms of
- competition
- geography
- financing availability
- sellers
competition
In commercial properties, which would NOT be a factor in demand analysis?
- construction costs
- per capita income
- rates of sales retention
- percentage of household income spent on retail
construction costs
(Construction costs would be a supply factor.)
Which of these would NOT be a submarket of the market for residential properties in Anytown, USA?
- starter houses under $60,000
- residential properties
- rural houses
- new houses
residential properties
“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics” is the definition of
- aggregation
- disaggregation
- subdivision
- layering
disaggregation
“The objective analysis of observable and/or quantifiable data indicating discernible patterns of urban growth, structure, and change that may detract from or enhance property values is the definition of
- growth analysis
- market area analysis
- highest and best use analysis
- feasibility analysis
market area analysis
Which of the following would NOT be considered in supply analysis for a residential property?
- income and wage levels
- number of building permits recently issued
- existing stock of homes
- availability of financing
income and wage levels
Income and wage levels would be a demand factor
Identifying the most probable user for a particular type of property is a component of ___________ analysis.
- economic base
- macroeconomic
- supply
- demand
demand
A market analysis examines the supply and demand for ___________, while a marketability analysis examines ___________ .
a type of property
a specific property
Which of the following would NOT be considered in supply analysis?
- existing stock
- conversions in progress
- properties offered for sale
- population trends
population trends
